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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ... (More)

About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved downtown in 2006 and enjoy being able to walk to activities. I do not drive and being downtown where I work and close to the CalTrain station and downtown amenities makes my life more independent. I have worked all my life as an economist focusing on the California economy. My work centers around two main activities. The first is helping regional planning agencies such as ABAG understand their long-term growth outlook. I do this for several regional planning agencies in northern, southern and central coast California. My other main activity is studying workforce trends and policy implications both as a professional and as a volunteer member of the NOVA (Silicon Valley) and state workforce boards. The title of the blog is Invest and Innovate and that is what I believe is the imperative for our local area, region, state and nation. That includes investing in people, in infrastructure and in making our communities great places to live and work. I served on the recent Palo Alto Infrastructure Commission. I also believe that our local and state economy benefits from being a welcoming community, which mostly we are a leader in, for people of all religions, sexual preferences and places of birth. (Hide)

The Public Health Insurance Option

Uploaded: Sep 10, 2009

Debate over a proposed public health insurance option has become the lightening rod in the current debate about health care reform. Last night President Obama made his case for the public health insurance option to the Congress and the nation.

The President's first point was to tell people who have private insurance that nothing in his proposal forces them or their employers to change their current coverage. The public insurance option, he argued, adds choice and competition to the health insurance system. This is true but it does not address the fear and possibility that companies could choose to reduce or eliminate current health insurance coverage.

The President then offered a new and thought-provoking point about the public option. Look, he said, we have public colleges competing with private colleges and the result is more choice. We know in California that the large and publicly financed UC, CSU and community college systems in California have not put Stanford, USC and other private colleges out of business.

I like the idea of a public health insurance option but I am not sure that it is essential in 2009 and or that a trigger approach isn't a viable compromise.

But I do think there are additional arguments for a public insurance option that the President only hinted at last night.

First, I think there is a point of clarification that most everyone knows but which rarely gets said out loud. We are talking about a public health insurance option, not public health care provision. In the case of public colleges or the Post Office, the payment is publicly funded but the delivery is also done by public employees. It is public funding and public delivery.

In the health care reform debate, no change is proposed in who delivers the care. The same doctors, nurses and hospitals will deliver care with or without a public health insurance option. It is another insurance choice but not a change in who delivers care.

The Post Office is a more interesting case for thinking about a public health insurance option. The Post Office is heavily subsidized although we are trying to make it pay for itself. No one can argue that the Post Office competition has prevented FedEx or UPS from thriving. As the President said if the public health insurance plan can't compete well, it will simply die or shrink as the Post Office is doingalthough that is affected by the drop in demand for paper transmittals.

The key point about choice that is not said often enough is that the choice of employer based health insurance coverage is diminishing and likely to fall further. And the cost to employers of their company plans is increasing much faster than their wages.

That makes the choice of the status quo not a choice at all. It is there now and uncertain for tomorrow. So this is an especially good time to add a new choice and to focus the spotlight on decreasing health care costs, which I think involves changes in medical practice in some cases and changes in how the fee for service system affects care incentives.

Since 2000 the nation's population has increased by 25 million and the number of people covered by employer-based insurance plans has increased by---zero. In fact in 2008 the number of people covered by their employer dropped by 1 million and that figure will surely be higher in 2009, 2010 and 2011.

As a people we have a tendency to imagine problems away or think they can be solved without any change in behavior. We think up all sorts of reasons not to deal with public deficits or the impending Medicare funding crisis. And in this case we are on the verge of thinking that the status quo in employer-based health insurance and costs can continue. It can't so we need to make our choices with that reality in mind.

And, as the President said, our economy and public budgets feel the strain of high and rising health care costs.

I wish there were more attention to rising costs and more attention to being real about how health care insurance reform will be paid for. I am not satisfied with the President's answers but I am not satisfied with anyone's answers in Congress at this point.

But, as the President argued, that part of health care reform that involves improving choice and competition through a public insurance option has a sound foundation and should force us to be real about adding it to an employer-based insurance system under great pressure and unlikely to survive without the pressure to change.

Posted by Bru,
a resident of ,
on Sep 10, 2009 at 12:51 pmBru is a registered user.

The President's speech last night was well done.

I support a "strong" public option and I believe a majority of Americans who are serious and informed about health care do as well.

Some say just maybe the public options is not absolutely critical, but given the decades of deceit by private industry on health care taking that chance is foolish, dangerous and would only indicate the power of money to corrupt the system.

When you look at the language used on this discussion there is a lot said about insurance companies not being able to refuse people coverage. People who will be forced to buy private insurance. Insurance companies will have to offer coverage and stop denying claims once their customers are covered, but there is nothing said about being affordable or how good the enforcement of regulations will be.

What good is qualifying for insurance that is too expensive for people to afford or that they lose if they become unemployed and cannot pay?

Posted by Mike-Crescent Park,
a resident of ,
on Sep 10, 2009 at 4:00 pmMike-Crescent Park is a registered user.

After the election but pre-inauguration I attended a panel presentation at the Stanford Faculty Club. Its subject was what to expect in 2009 from the new administration. There were three panel members, experts in healthcare policy, politics and government.

They forecast, among other things, that the public option would be put forward as a strategy to lead to single payer. And that the first steps once enabled would make the process irreversible in any practical way. That is what Obama and the Democrats are doing here.

If you want to believe Obama at face value, you must look at the number of times he was disingenuous in his speech last night, and how that can possibly be reconciled with a his oft proclaimed love of transparency. The answer is he is working to sell a concept that would be unpalatable to a lot of people if they understood where it will end up. And to do it he (and the Democrats) has been anything but transparent. Obama is on record in a speech to a labor group that he is for a single payer system, but he believes it will take some time and patience to get there. In this I do believe he was being transparent.

Polls show a majority of Americans happy with their healthcare and insurance. In order to cover a minority of uninsured Americans, our current plans will be devastated and a new monster government run bureaucracy brought to life. You don?t cover 50 million more people, fund a bureaucracy and at the same time save money.

Got any good examples of major government run programs that come in at budget and deliver on the stated initial (unrevised) goals?

Posted by bru,
a resident of ,
on Sep 10, 2009 at 5:57 pmbru is a registered user.

[Portion removed by Palo Alto Online staff.]

President Obama put forth the public option after decades of abusive behavior by the health care industry. If they had not screwed over the public to the point that thousands of people are falling out of the system every day there would be no need for the entire debate, or government action at all.

But as usual, when corporations are given regulatory power over themselves and trusted to be fair, they fall down on the job - and that is why Obama and many others who have studied the health care industry, with perhaps more objectivity that Stanford University can bring to bear on the matter, support a public option.

It would only be the first step to single payer if the insurance companies continue to do what they have developed the expertise and power to do to our system - or rather if they cannot resist maximizing profit and increasing their political monopolistic power to control our health care system.

There are countries where they have universal health care and insurance companies still dominate, they just know how to do something we apparently do not have the ability to do in our system - regulate their private sector to prevent abuses.

Anyway, for me, single payer would be fine with me, but I am also happy to support the President's vision as a compromise. The big thing is that even now, what we have is not doing to the job, and it is trending worse. If you were an employee and your performance was as dismal as our insurance industry you would have been sacked a long time ago. The reason we have not is due to our political corrupt system, which in all fairness Obama is trying to turn around and fix.

Posted by stephen levy,
a resident of ,
on Sep 10, 2009 at 8:05 pmstephen levy is a registered user.

Mike,

Are you saying that the Marines or Army are incompetent? Does the UC system provide bad service. I hear good things about the VA--do you disagree? Do you think the Center for Disease Control or NIH funded cancer research should be scrapped?

I tend to agree with Bru that the only way the current plan leads to single payer is if the private insurance companies are incompetent, which I am not arguing.

What do you think about the points made by the President and me about public colleges and the Post Office. Are you arguing that they have unfairly ruined private competitors?

I don't read all the polls but I have not seen any that show people are satisfied with their insurance if you include a question about cost or those denial of care issues.

Finally, do you disagree that employer-based coverage iz expensive for business and is slowing eroding from high costs?

Posted by Paul Losch,
a resident of ,
on Sep 10, 2009 at 9:17 pmPaul Losch is a registered user.

What remains the "black box" for me is how any approach will bring down the cost of health care in the US as a % of GDP.

Forbes has an interesting article this week about how Germany's system works. Included in the article is the % of GDP that health care expenditures represent in different western economies. To quote the article: "nowhere is more expensive than in America."

Journalist TR Reid had a recent write up about health systems in different western nations, and pointed out how comparable bundles of care were much more costly in the US than in other countries. His take on it was that we have so many different entities involved in the payment side of things that it has created a huge overhead that is not found in other countries, whatever model they use. And it all has to do with billing and payments. He goes on to describe ways in other countries that take that complexity out of the health care equation, and good health care is delivered. Not mediocre health care, good health care.

I think Reid is on to something, and I am not convinced that this particular Gordian Knot is part of any proposal or obstruction that is presently circulating in Washington, DC.

Among the SPAM I constantly get on my e-mail accounts are messages with a picture of a nice looking young lady below a headline that reads: "have a career in medical billing." She is dressed in greens and looks like she is having a great time at work. I suspect that reality of the job is something different, and more importantly, part of what is contributing to the cost disparities US health care faces.

Does anyone else find lacking discussion around the cost containment/re-structuring side of this whole matter? The DC drama is to be expected, and it has taken some nasty turns, but this is a fundamental question. I see the VA model from first hand experience with my dad as one possible example of how it could work for the entire country, but I don't even see the question getting discussed adequately as part of this entire conversation.

Posted by Bru,
a resident of ,
on Sep 10, 2009 at 9:42 pmBru is a registered user.

From a simple superficial point of view one has to compare what we get with the commerical right-wing production line media with the more information based media such as PBS.

With right-slanted media, the repetitive criticisms of things like death panels, socialism, combined with other right wing claims, all "kitchen-sinked" to create maximum associative distress with their viewers and making it hard to discuss or refute since the climate of objectivity is poisoned. The whole issue is framed as government bad, freedom, liberty, capitalism, with few actual facts at issue at all.

On the other side, there is PBS, for example, McNeil/Lehrer or Bill Moyers. For the last several months they have had experts on such as T. R. Reid who has actually been to and used the health care systems that for decades we have heard from the commercial media are so terrible - Canada, Germany, France, Britain, etc. We have former Cigna excecutive Wendell Potter telling it like it is from the inside of these very companies as they strategize about how to use tricks to marginalize people like Michael Moore. Potter said that health insurance companies had to attack Moore because the facts told in the story of his movie was essentially correct. Almost every night there is a factual intelligent interview or discussion on these issues.

What we are seeing is the intersection of pathologies of our corporate society that scares the heck out of me. If we have health care reform, and we start to see the pathology of our way of life and how it breaks down our health in multiple ways, whether it leads to socialized medicine or not is not the issue, the issue is the changes and work to be done to fix things like our dependence on fast food, and chemicals.

I saw the movie Food Inc. at the Aquarius several weeks ago, and it was astounding to see the extent to which we are in the dark about the by-products of our way of food production. I think this is the real fear.

Another media issue was that it is illegal to criticize certain agricultural industries in our country. When Oprah Winfrey made an offhand comment about never eating another hamburger she was sued by the Texas beef industry. My jaw dropped when I heard this ... why is this clear abridgement of our freedom of speech not taken up by our mainstream media? They are afraid to be sued or to lose sponsors, or offend their own parent corporations.

The forces have moved into place and aligned such that they are all threatened by a society where people are tired of the direction we have been moving and want to turn around its health care system to care for people first. This is astounding when the pieces become visible.

The good part is that there is so much work to do and things to make as we fix and correct our system that the US could well easily become an international leader again. We just need the will and to see clearly and the determination not to be led down the primrose path of marketing and inflamed emotions.

Posted by Mike-Crescent Park,
a resident of ,
on Sep 11, 2009 at 11:21 amMike-Crescent Park is a registered user.

As usual on these posts, the ensuing discussions have gone a thousand directions. "Right slanted media" is an indication of this. Except for a few talk radio shows that are successful and conservative, the entire mainstream media is heavily biased to the left.

As an example (as if one were needed) look at the way Cindy Sheehan was covered by all the networks and papers when she was camped out in Texas protesting Bush, but now that she has moved her protests to focus upon Obama's continuation of the two wars, Charles Gibson (whose ABC network covered Cindy in Texas extensively) says " enough already." And the NYT did not cover the Van Jones story until the spotlight was on him by others and resignation was imminent. "Right wing slanted media" is the minority here.

To the (I hope) point of this original post-It is disingenuous to counter my challenge to name a government program that attained its original goals and came in on budget by bringing up the Boeing Dreamliner. Boeing has been a successful company for many years, and has to do it overall without having Congress appropriate more funds to cover major bungling. And the Army, Marines etc do seem to be more successful than most government agencies, but that is likely because they are not subject to everyday political control, just budget allocations and frequent criticism. Even so the waste in the military is huge and would not be sustainable by business.

Regarding peaceful coexistence of private and public universities and USPS with UPS, the answer seems clear. The government could run universities and UPS out of business if it so wished by imposing regulations, taxes and other conditions making it impossible to make a profit and survive.

This is pretty much what has happened in Washington DC where Senator Dick Durbin has killed an existing school voucher program used by hundreds of local students despite saying that he would approve what the DC City Council decided. It is a decision motivated by politics and what the teachers' union wants. Any government foray into our health care will have the same political motivations.

Let's get specific with another government run health program-Medicare. Here is the link to a piece answering the claim that Obama just made: Medicare is a template for the new health care plan. See what you think of the arguments made and data quoted in it.

Posted by stephen levy,
a resident of ,
on Sep 11, 2009 at 2:17 pmstephen levy is a registered user.

Paul,

I agree that discussion of the cost side of health reform is lacking.

I would like to see more about how the proposals will be funded but even more important to me is discussion of how to reduce health care costs. I have seen some interesting ideas and will try and post over the weekend.

I have tried to stay out of the whether private insurance companies are evil debate. BUT I do think that private employer-based health insurance is under tremendous cost pressure to companies and is on a slow death path.

I read today that 63% of companies plan to shift some more costs to employees in 2010 and the article has a spirited comment section at the end.

I continue to believe that people are kidding themselves if they think the present employer-based coverage will continue as is. We need to make some choices to face the slow erosion of employer-based coverage and escalating costs to workers and companies.

Posted by ethan,
a resident of ,
on Sep 11, 2009 at 3:11 pmethan is a registered user.

Stephen--Good post.
Just a few observations:

If Medicare is an example of a failed public program, and the public largely agrees, why don?t the Republican?s propose dismantling it and substituting a privately funded program? I think we know the answer to that question. They saw what happened when Bush & Company tried to privatize Social Security. If in fact Medicare is ?going broke,? why is it not being adequately funded? If Medicare were extended to everyone, wouldn?t Congress have to at least attempt to ensure that it was well run and funded? After all, it would then be everyone?s puppy.

I agree with some of the reform nay-sayers on at least one point: Any plan that Congress comes up with should apply to every member of Congress and his or her family, as well as to members of the other branches of government, no matter how long their tenure. Call it the ?eat your own cooking,? or perhaps the ?pack your own parachute? incentive plan. Why is this idea considered so fatuous? The voters would love it if the generals got down in the trenches with them and took some fire once in a while.

And we need a real debate about why government is so reviled by so many. Is it really in the very DNA of government institutions to be inefficient, unimaginative, and unresponsive, always and forever? Are all government workers by nature incompetent time-servers who have no pride in their work? Isn?t this just a sort of reverse Marxism? If you worked in a company where a group of senior executives regularly reviled the organization as ?the problem, not the solution? and accused employees of being a bunch of good-for-nothings, what would the effect be on that company?s performance in the marketplace? Would that negative, defeatist attitude be tolerated in the board room or among the shareholders? In a Dilbert world, maybe.

You want a few examples of major government-funded programs that achieved their goals. How about the 1941-1945 war effort? How about the space program? (Man on the moon by the end of the decade: done.) How about the federal highway program in the 1950s and 1960s? How about the Bay Area bridges? (Golden Gate: on schedule, under budget). How about Hoover Dam? (Two years ahead of schedule, under budget.) Apparently it is possible, given the right attitude and the right governance. Now shall we consider some corporate initiatives that did not achieve their goals? That list would go to the moon, too.

Bottom line: Why not think of healthcare reform as a once-in-a-lifetime opportunity for America to really hit something out of the park for a change? Create the best health system in the world for the whole citizenry, not just the rich, the well-employed, and the aged. Put top people in charge. Enlist the best talent we?ve got. Apply some of that American ingenuity and know-how we supposedly possess in such large supply. Get behind it or get out of the way. Make it happen.

Or maybe we just don?t have it anymore, and it?s time to hang up the spikes. That would be sad indeed.

Posted by stephen levy,
a resident of ,
on Sep 13, 2009 at 11:20 amstephen levy is a registered user.

Below is the link to a recent Brookings Institution essay on the causes and cures for high health care spending in the United States. I encourage readers who are expert in this field to comment on teh Brookings essay.

To lower spending without lowering net welfare, it is necessary to organize the
delivery of care to promote efficient cooperation among the many providers and
practitioners involved in delivering modern treatment, to conduct costly research
over many years to identify which procedures are effective at reasonable cost, to
develop protocols that enable providers to identify in advance patients in whom
expected benefits of treatment are lower than costs, to design incentives that encourage
providers to act on those protocols, and to educate patients on why such
protocols should be sustained. Furthermore, if spending reductions are to prove
beneficial over time, it is also necessary to provide research support to maintain
the flow of beneficial innovations.

Provider payment reform has a critical role to play in promoting efficient and
coordinated delivery. Fee-for-service payment, especially when relative values are
distorted, works against efficiency. Changes in theMedicare program have the potential
for broad impact, sinceMedicaid programs and private insurers tend to follow
Medicare methods. Reform would involve increasing both the degree to
which current relative payments reflect relative costs of efficient production of
services and the use of broader units of payments, such as per episode and per person,
in either case likely blended with fee-for-service.

Posted by stephen levy,
a resident of ,
on Sep 20, 2009 at 12:44 pmstephen levy is a registered user.

The Kaiser Family Foundation just released 2009 data on health care costs and coverage.

They emphasize an important point, one which the President is making more and more--employer-based coverage is getting increasingly expensive at the same time coverage and benefits are being cut. The status quo for people who have good coverage now is not safe.

There are enourmous issues of paying for reform and making reform focus on bending the cost curve, but this IS an issue of interest to people who are doing well under the current system as well as those who are being left or forced out.

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